Life After Retirement When Every Day Is Saturday

If You Can’t Handle a 3 Week Vacation What Will You Do with a 30 Year Retirement?

Most people are at least somewhat agnostic about life after death. But for most people, a Damascus Road experience is necessary to envision the reality of life after retirement when everyday is Saturday. If you can’t handle a three-week vacation, what are you going to do for thirty years? Watch the interview with popular platform speaker, best selling author and registered financial consultant Justin Shaw.

It is a well-known fact that people who proactively plan tend to be more successful than those that merely react. People need a realistic income plan for retirement. It needs to cover their healthcare costs, and their costs of living, as well as any unforeseen incidental expense. Part of the problem is that people assume that they can grow money in their retirement years at the same rate as they did during their working years. This is simply not the case. Consider that people in their seventies tend to travel and spend less than in their sixties, but they might still have a lot of money tied up in the market. That’s great if the market is bullish, but it’s not! That introduces a lot of risk into the equation that must be managed appropriately to avoid a precarious situation as they age further. So thanks to medical science, people have the ability to live longer. However, this only works to increase the already incalculable unfunded liabilities of the government. History reflects that at least one of their measured responses will most definitely include an increase in the tax rates.

After eighty, there is another spike in spending associated with healthcare expenses. A person should be prepared to assume the lion’s share of these expenses in the latter part of their life or the life of their loved ones. Many loving couples can become strapped with unmanageable healthcare-related costs, which further erode their distressed lifestyle. People need to realize that if they want to be successful, they need to be focused on accumulating wealth in their younger years, and then preserving it in their older years. This proactive approach to retiring ensures that they will have enough money to survive.

Taxes! Nobody wants to talk about them but they are applicable to most financial situations. Everyone is in the dark about them and how they affect their retirement income. I suppose that they foolishly think that if you don’t mention them, then they will not be impacted by them? When the IRA was introduced in 1973, the highest marginal tax bracket was 70%. The idea was to defer taxes when the rates were high, and then take money out later when the tax rate was lower. Unfortunately, but not surprisingly, those very rates fell as when we saw them drop to 50% in the early 1980’s and then, more recently, to 39.6%. This resulted in a phenomenon whereby people invested money at a lower tax rate than they would ultimately withdraw it at. It is a situation that is completely opposite to the one that was prophesied in 1973.

Unforeseen economic downturns may also negatively impact the best- intentioned retirement plans. Case in point, I learned that a close friend enjoying his much deserved retirement in his sixties was managing his own accounts. I soon learned that all his funds were heavily leveraged in the market. I strongly suggested he move the money someplace where it would be more protected. In the end, he shifted over 10% of his funds, but managed the other 90% himself. Just moving the 10% was difficult as it was returning a much lower rate than his other money. I reiterated to him that it would best to: “plan for the worst; hope for the best.” The unthinkable happened in 2008, when the market “fell off” the proverbial cliff. This same person ended up losing almost all of the money that they had been self-managing. The only funds left were those very funds, which amounted to a mere ten percent of his retirement assets. This person was forced to return to work after only ten years of retirement. Sometimes, you need to keep people from being their own worst enemy – Justin Shaw.

Right on the Money is a financial talk show comprised of an exclusive group of insurance and financial professionals from around the country who have a desire to inform consumers on financial-focused topics that could affect the way they plan for retirement.

This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation. The presenters of this information are not associated with, or endorsed by, the Social Security Administration or any other government agency. MP-0364 – 2016/11/28